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Such uncertainties are eye-watering. For example, if all the people with informal care switch, this adds £17 million to the cost. If the Government have
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underestimated the number of younger adults with needs by just 10,000 across the country, it adds £6 million. If care inflation rises faster than general inflation-at 4 per cent., for example-this would add £14 million. An arbitrary underestimate of the numbers of elderly people of just 1 per cent. adds an extra £5 million. The assumption that the relationship between care need and cost is linear-in annex A-turns out to be wrong. Again, a 1 per cent. deviation equals £6 million extra. If all these costs were realised, it would cost an extra £49 million a year. If the Bill provides a perverse incentive for care homes to redesign themselves as "extra care"-we have had some discussion about that-and that happened, it would add an extra £1 billion to the cost. Even if only 10 per cent. did so, it would still be another £100 million.

My estimates are, perhaps naturally, pretty conservative. The noble Lords Lipsey and Joffe, in their supplementary memorandum to the Green Paper, were highly critical of this measure, noting that the costs in Scotland inflated by 74 per cent.-that was equivalent to an extra £500 million in the first year. Leaving aside the potential costs of the measure, given that people will not receive transport, meals, cleaning, shopping, sitting services and so forth free of charge, will the Minister tell us the likely range of spend on such services for an individual receiving what the Government are now proclaiming as free care? On that basis, I support amendments 31 and 27, and point out that we may well wish to divide the Committee.

Mr. Dorrell: I congratulate my hon. Friend the Member for Eddisbury (Mr. O'Brien) on tabling the amendments and again on the way in which he spoke to them. Both amendments are hugely important.

Amendment 31 deals with the European convention on human rights. My hon. Friend should be specifically congratulated on reminding the Committee that the modern world is increasingly one in which the untrammelled right of law-makers to make laws that seem like a good idea on their way to the party conference podium is qualified by a series of commitments that Governments have entered into over the years to ensure that the laws of this country comply with certain basic principles. For our present purpose, the principles are set out in the European convention on human rights. According to one of them-acknowledged in the explanatory notes-it is not consistent with the convention, and therefore with good law, to discriminate between individuals on the basis of where they live. First, the Government acknowledge that that is a principle of good law because it is in the convention, to which this country is a signatory. Secondly, the explanatory notes explicitly recognise that an individual in residential care

This is not something dreamt up by my hon. Friend; it is something that the Government recognise as a potential weakness in the Bill.

What is the Government's defence? According to the explanatory notes,

Members should note that it is acknowledged to be different treatment-

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I do not follow those two sentences. The explanatory notes state that the Department's view is that the different treatment is not discriminatory, and then state that it is discriminatory, but that the discrimination is justified

Having acknowledged that the treatment is discriminatory, the Government then say that the discrimination, despite being contrary to the ECHR, is justified because in the Department's view, or more precisely the view of the Prime Minister-I do not believe for a moment that the policy had its origins in the Department-

Let us consider what is the "legitimate aim", and whether it is, in truth, proportionate. According to paragraph 23 of the explanatory notes:

That is set out as the objective of the policy. Let us now consider how effective, according to the impact assessment, that policy will be. According to the assessment, the Government believe that 2,000 of the 277,000 people affected will switch from residential care to care at home as a result of a policy whose purpose is

The Government's proposition is that they want to delay people's entry into residential care. Their own assessment of the effectiveness of that policy is that it will stop 2,000 people entering residential care. The question for the Committee and, I suppose, ultimately for the European Court is whether the Department is right in saying that that is proportionate.

What the Department is doing is violating rights under article 14. The Government cannot argue that they are not violating those rights. Indeed, they have acknowledged that they are doing so, but claim that that is justified by the policy objective, which they describe as proportionate. When the policy objective is measured for its effectiveness, it is shown to involve 2,000 people. The rights of all the other people in residential care-there used to be roughly 500,000, and I would guess that the figure is still the same-are being violated. Those people are being discriminated against so that 2,000 people-according to the Government's own assessment-can be prevented from entering residential care.

I invite the Committee to reflect on whether the defence of the policy set out in the explanatory notes stands up. My hon. Friend has already given his assessment of the two pages in which the Government have set out their position, which might be described as "Methinks they do protest too much." The Government have acknowledged a violation of rights, and have justified it on the grounds of the delivery of a specific policy-the policy being that 2,000 people's care arrangements will be changed, but the rights of 500,000 will be violated so that those 2,000 can benefit from the Government's policy change.

Mr. John Redwood (Wokingham) (Con) : Does my right hon. Friend believe there is a serious chance that the legislation will be struck down under the provision in the European convention?

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Mr. Dorrell: My right hon. Friend and I are not the only ones who think that there is a serious argument to be answered. The Government clearly share that view. I invite him to assess exhibit A: the explanatory notes, in which the Government have devoted two pages of typescript to explaining why they are safe under this exposure.

Let me now deal with the second amendment. The two are linked. As I have already pointed out, in assessing the principle of proportionality we must first assess the 2,000 people against the 500,000. We must then assess the 2,000 against the £500 million that is being spent on meeting this policy objective. Is the Bill proportionate, given that it has assessed 500,000 people against 2,000? Is it proportionate when it is recognised that the public spending cost of the Prime Minister's commitment to achieving the change in care arrangements for 2,000 people is, according to the Government's own estimate, £500 million?

I do not believe that the Government have delivered their estimate of cost beyond the two-and-a-half year horizon. As my hon. Friend the Member for Eddisbury pointed out, if we look beyond that horizon, the £500 million will increase geometrically when the behavioural consequences of the measure are taken into account. According to Lord Lipsey's analysis of behavioural change and its financial consequences, the policy will result in a public spending cost well north of £1 billion. I invite the Committee to consider again whether that is a proportionate way in which to deliver the policy objective of enabling, supporting and encouraging

given the Government's belief that 2,000 people will be affected.

Enlarging on the spending element, my hon. Friend was right to observe that apart from the principle of article 14 of the ECHR, there is the further question of affordability, value for money and the policy assessment of that £1 billion expenditure. We should bear in mind not just the general financial environment with which everyone is familiar, but the fact that the context of the Green Paper that the Government presented last July was correctly recognised to be the demand pressure, and therefore the spending pressure, that is already building in this sector, reflecting rising demand for social care, and rising expectations about the standard at which that care will be delivered to the next generation of elderly people.

7.30 pm

That is why my hon. Friend is entirely right to ask for a proper statement of the Bill's financial consequences looking beyond the current two-and-a-half-year horizon. We should remember, of course, that the projection by Derek Wanless did not confine itself to two and a half years, but looked forward to 2020. If my memory serves me well, he envisaged the cost of social care rising from 1.2 to 2 per cent. of GDP over that period-in other words, a marginal, additional cost merely to maintain the current level of social care delivery of 0.8 per cent. of GDP. My hon. Friend will probably remember better than I the current size of GDP, but such a percentage must equate to about £20 billion-and merely to maintain the current delivery of social care.

Despite the words in the Green Paper and the weasel words of the Minister from the Dispatch Box when he tried to evade the point, the Government are encouraging
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people to believe that the underlying rising demand for social care cannot be met on the basis that it all be paid for by the taxpayer. The Government are now half promising, however, that the taxpayer will meet the bill, which will further constrain our ability to deliver on the rising amount and quality of care that we all want.

Dr. Ladyman: I was not going to comment, but I will now because the right hon. Gentleman has gone into party political matters. Is it not a little strange for him to pray in aid Wanless and talk about the rising costs over 20 years of social care, given that the solution proposed by Wanless-a reform of attendance allowance -is the one policy that those on his Front Bench oppose?

Mr. Dorrell: Wanless proposed a variety of different funding mechanisms, but the truth is that neither major party has leapt to pick up the main Wanless proposal. We had a debate on that, prompted by the Government's Green Paper, to which I contributed. I said that the debate had come far too late and that we should have had it 10 years ago, as the Prime Minister at the time had promised. None of that, however, alters the fact that we are now committed down a policy line that half promises precisely the policy option that Wanless ruled out, that the Government ruled out, that the hon. Member for South Thanet (Dr. Ladyman) to his credit has again ruled out, that my party has ruled out and that even the Liberal Democrats have now ruled out-that it all be loaded on to the taxpayer. That is an unsustainable option. The Government have always recognised that it is unsustainable, but they are now half promising to take that route. No wonder they will not publish a projection that shows how much it will cost.

Greg Mulholland: I shall try to keep my comments brief because I am conscious that time is running out, and I am keen to get through the rest of the amendments if possible.

I want to speak to Liberal Democrat amendment 45, but I will also comment on amendment 27. The amendments follow on succinctly from the last set of amendments and relate again to the concerns about the costs of the Bill and the fact that not only is there a real lack of faith in the costs set out in the impact assessment-many organisations have expressed that concern-but that there is a potential burden on local authorities. It would be sensible, therefore, to have in the Bill a method of reporting to Parliament on the costs.

It is a shame that we did not discuss that matter with the hon. Member for Eddisbury (Mr. O'Brien) before, because the best amendment we could have tabled might have included subsection (a) and (b) of our amendment 45 and (b)-as subsection (c)-of his amendment 27. Having the estimated costs in future years is a good suggestion. It would also be incredibly sensible to have the annual reporting done according to every local authority area, given the burden placed on local authorities that we discussed earlier.

To get to that stage, it would also be incredibly helpful-I hope that the Minister accepts that this suggestion is intended to be helpful-to look at the number of people claiming free personal care at home under the terms of the Bill. That would be sensible because it would allow the Government to identify where there is a particular need and which local authorities
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in England have a larger proportion of people eligible-particularly a larger proportion of older people. Where there are certain demographics, and where local authorities will be particularly burdened, it would be helpful, for those local authorities and Parliament, to have such a report.

I do not know whether the hon. Gentleman intends to press amendments 31 or 27-or both-to a Division, but we would certainly support amendment 27. I think that our amendment is slightly clearer, but given that he gets the chance to press his, and we cannot press ours at this point, we would support him.

Phil Hope: I shall address the issues presented through the amendments. First, let me be clear on amendment 31 concerning the European convention on human rights. The Bill has been deemed compatible with the ECHR. The memorandum, which is detailed and quite thorough, was criticised for being too long, but I think that doing it well and thoroughly means that we get it right. Guidance has been sent to the Chair of the Joint Committee on Human Rights, and I have the joint memorandum with me.

Hon. Members are right to draw attention to what I think is a well-argued case that the grounds for the different treatment of people living in their own home are clear. The key thrust of the policy behind the Bill

As such, the policy pursues a legitimate aim and one that goes back across different Governments. The policy will achieve that aim in a proportionate way because it is aimed at those with the highest need-the group of people most at risk of having to enter residential accommodation and who therefore have the most to gain from taking advantage of the provision of free personal care in their own homes. The Department's view is clear: the policy behind the Bill is not discriminatory. That is clearly laid out in the measures.

I might add that we are already seeking to ensure that any secondary legislation and guidance is compatible with the convention, and that the regulations that the Secretary of State will be empowered to make under the Bill and related guidance will be no different in that regard.

Mr. Dorrell: Will the Minister confirm that the Government's own impact assessment states that the number of people who will switch from residential care-in other words, who reflect the achievement of the policy for which the derogation from the ECHR is effectively being sought-is 2,000?

Phil Hope: The key thrust of the Bill

The right hon. Gentleman has rightly described one particular group of beneficiaries-those people who might switch. I understand that that is in the impact assessment. However, there is another much wider group of people whom we will help to avoid or delay entering residential accommodation.

Mr. Dorrell: If that is the argument on which the Government will rely, why did they not set it out in the impact assessment?

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Phil Hope: I think that everything has been set out. I have set it out here. It has been set out in the memorandum sent by the Department of Health to the Joint Committee on Human Rights.

Mr. Dorrell: I am grateful to the Minister for his patience. That is exactly my point. It was not set out in the impact assessment, but was rushed out of the Box to give the Minister something to say. If that is the basis on which the Government are relying, why was it not in the impact assessment?

Phil Hope: Nothing has been rushed out from the Box. One might argue that it could have been, but no doubt there was confidence in my abilities to answer these questions fully and thoroughly by referring directly to the statement that we put to the Joint Committee on Human Rights. I think I have put that matter to rest. Amendment 31 calls for an annual report on compatibility, but that is an unnecessary requirement because the Bill is compatible.

Amendments 27 and 45 would require the Secretary of State to report to Parliament annually on the costs of providing free personal care at home, the estimated costs of that in future years, and the number of people who receive personal care in each local area. The hon. Member for Eddisbury (Mr. O'Brien) made a number of detailed points about the impact assessment. He repeated a number of the answers I had given to him via written questions, and he went on to make a series of interesting extrapolations, because the impact assessment is in place for only two and a half years. I want to reiterate a point I have made to him on the Floor of the House and in writing: the impact assessment covers only the period from October 2010 to the end of 2012-13. Estimating beyond that point is problematic because of the uncertainties involved. As I said in respect of previous amendments, the proposals in this Bill are a step towards having a fully integrated national care service, at which point a different set of assumptions will need to be applied, and therefore the hon. Gentleman's extrapolations will not apply.

I also want to emphasise to the Committee-the hon. Gentleman acknowledged this in moving the amendment-that we have committed to reviewing the implementation of free personal care within the first 12 to 18 months of the policy coming into force. After that review, it will be possible to reconsider the predicted costs of delivering free personal care and the conditions for eligibility, if necessary.

If the costings for the first year prove to be accurate, it would be an unnecessary burden on local authorities for them to have to produce data to enable the Secretary of State to report to Parliament annually on this matter. Such a report would require a greatly increased volume of data collection by local authorities, which I think both Government and Opposition are keen not to impose. There will obviously need to be some increase in the amount of data collected by councils in order that the delivery of free personal care can be accurately considered, and we are consulting on what data would be needed and how the extra data might best be collected so that the extra pressure on local authorities is minimised-an aspiration that I think both Government and Opposition would support.

On the basis of my responses, I ask the hon. Gentleman to withdraw his amendment.

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